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The Business of HockeyDiscuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, NHL revenues, relocation and expansion.

Lockout VI:ve la Revolution!

So this is to say that this season (if there is one) will not operate on a 50% cap, nor will next season? That 50% comes in in year 3?

This season will be a 70.2m cap. Next season will be a fixed cap (60-65m). Year 3 will be 50% of HRR + make whole. There's really no way to determine what the cap for year 2 should be due to missing the majority of this season. So they set a fixed number, and go from there.

__________________I've been looking for trouble... but trouble hasn't been cooperating!

No not really. Say the Leafs went to the finals. If NJ can pull in 32m in playoff revenues, say the Leafs can bring in 60m (also makes the math easy).

60/2 (50%) is 30m. Basically them going to the finals would increase the cap by ~1m. Yes it's significant/noticeable that 1 team could do that, but not earth shattering by any means.

However, the fact that so many big market teams have been successful lately has really boosted revenue and therefore the cap. Kings, Bruins, Canucks, Hawks, Flyers, Penguins, Wings. This is the reason the cap is so inflated right now.

It was $380 to $400 mill if they got a deal done really soon, like this weekend.

Holy crap! You mean the owners upped it again... After just 5 days to a week ago saying that the Make Whole (at $300mil) was one issue not open to negotiating higher. When are these guys going to learn??? They keep saying that certain points aren't open to further concessions and then the go ahead and concede further. The players must think the owners are play-doh, hard play-doh but play-doh nonetheless.

Holy crap! You mean the owners upped it again... After just 5 days to a week ago saying that the Make Whole (at $300mil) was one issue not open to negotiating higher. When are these guys going to learn??? They keep saying that certain points aren't open to further concessions and then the go ahead and concede further. The players must think the owners are play-doh, hard play-doh but play-doh nonetheless.

Yes, but there's things they want from the players. They don't really have much of a choice. Either play ball, and horse trade, or take your ball and go home. Remember, the NHL also needs to be looking at the long game here. Giving up an extra hundred million, hell even 150m (spread out over a 8-10yr deal) is peanuts when you consider what they're getting. Once they get player contract limits (like when they got the cap) that will never go away. So next CBA, they'll have a lower split, cap and contract limits. Means they can focus on other things. And if all it's going to cost them is some money, then they're better off for it.

Holy crap! You mean the owners upped it again... After just 5 days to a week ago saying that the Make Whole (at $300mil) was one issue not open to negotiating higher. When are these guys going to learn??? They keep saying that certain points aren't open to further concessions and then the go ahead and concede further. The players must think the owners are play-doh, hard play-doh but play-doh nonetheless.

As has been pointed out, this whole process is about how much the players are going to give up. There are no concessions from ownership's side, only bigger or smaller takeaways.

Yes, but there's things they want from the players. They don't really have much of a choice. Either play ball, and horse trade, or take your ball and go home. Remember, the NHL also needs to be looking at the long game here. Giving up an extra hundred million, hell even 150m (spread out over a 8-10yr deal) is peanuts when you consider what they're getting. Once they get player contract limits (like when they got the cap) that will never go away. So next CBA, they'll have a lower split, cap and contract limits. Means they can focus on other things. And if all it's going to cost them is some money, then they're better off for it.

Yes, they don't want the whole Season to be lost, that's what they want. And they're going to end up giving up enough concessions that it won't hardly have been worth missing even half the Season and then having to live with still an extremely malfunctioning CBA for another 7 to 8 years.

I am sure every GM in the league needs owner approval when giving out 10 year contracts.

Not down here. Mr. Vinik and Mr. Yzerman determine a budget. Mr. Vinik then leaves the GM job to the GM. The only time SY has to go to Mr. Vinik is if he wants to sign/trade for someone whose salary will take them over the current budget. Mr. Vinik knows he's not a hockey operations guy and said publicly he's not involved in any hockey decisions, he leaves those up to the people who know what they're doing.

Quote:

Originally Posted by CanadianPirate

Larry Brooks ‏@NYP_Brooksie
Other day NHL would allow 7 yr contract to start at 10 and end at 4 per. Now would end at 6. Don't quite get what game theyre trying to play

Yepp, sounds like the NHL has changed what they are offering. As soon as the disclaimer deadline passed they decided to revert to less favourable terms.

Sounds like pretty standard negotiating, but I doubt it has anything to do with calling the PA's bluff on the DOI "deadline."

Quote:

Originally Posted by Flamingo

A change in one term could've been made as a trade for changes in the PAs favor in another term. Conjectures that this was all post-dissolution pressure is, well, just conjecture.

Exactly. Both sides have been tossing offers back and forth for days now, and every one of them has changes here and there. That's the process.

Quote:

Originally Posted by stuffradio

It was $380 to $400 mill if they got a deal done really soon, like this weekend.

Wait - is that the overall total, or are you saying the league increased its make whole figure by $100M? I'd not heard that.

Wait - is that the overall total, or are you saying the league increased its make whole figure by $100M? I'd not heard that.

That's what surprises me too. By those figures, the owners already bettered their $300mil offer, but the players want even another $150 on top of the owners increase from $300 to $400mil.

Just how many Seasons does a $400mil postpone the 50/50 by? The figure being bounced around was that $300mil would postpone the 50/50 until after the 4th year. With what the players are trying to get now... You can damn well forget 50/50 until almost the end of this CBA (whenever that will be based on when the hell it's going to start).

This season will be a 70.2m cap. Next season will be a fixed cap (60-65m). Year 3 will be 50% of HRR + make whole. There's really no way to determine what the cap for year 2 should be due to missing the majority of this season. So they set a fixed number, and go from there.

So effectively you're saying we have two years of delinkage. So let's just toss some play numbers out to get a sense of what this might really mean. Correct me anywhere you think a better figure might apply.

Let's assume that NHL revenues get depressed about 5% this year, but that they rebound back to 2011-2012 levels by next season. Let's assume we also get an 8 year CBA.

For year 1, you pay the 70.2M figure, meaning 57% of last year's revenues, but now maybe we're looking at 5% less revenue to pay the same fixed figure. That would mean that you would pay 60% of potential HRR in year 1. Of course, it's only 58% of a season (presuming a 48 game schedule).

For year 2, revenues grow back to pre-lockout levels, meaning you assume 5% growth offsets the 5% drop you saw because of the lockout. Let's assume they settle at $62.5M for the new cap. That would be akin to paying 51% of HRR.

Years 3-8, let's assume 4% growth in the game - healthy, but not as fast as it was going the last six years (which, if I had a hunch on the matter, I would bet was unsustainable anyways). Players salaries grow from 1.7B in year 2 (presuming teams spend or don't spend to the cap in about the same proportions as they do now) to 1.76, 1.83, 1.90, 1.98, 2.05, and $2.14B in years 3-8, respectively, totally $11.6B. Now add your $300M in "make whole" money. If we assume 11.6B = 50% of revenue, then 11.9B would represent 51.3% of HRR over the same period.

So we have 51.3 over six year, 51 for one year, and 60 for 58% of one year. That would mean that over the lifetime of the CBA, the NHL would be paying 51.9% of HRR.

Of course, if you presume any slower growth in the game or a more appreciable drop in revenues thanks to the lockout, it could be larger. But I think it's just helpful to try and consider what this really means when you're talking about accepting some delinkage and some make whole. It means we might be closer to talking about 52% for players.

I always assumed that meant a direct salary rollback like the one in 2005 that reduced all existing contracts by 24%. I didn't think it meant that they wouldn't be looking for a lower cap.

Yeah, I was making the point that not only was there an expectation that the cap would be reduced but the NHL was advising teams not to expect a salary roll back to help them cope with a lower cap as happened in 2005.

Okay, let's apply your scenario. The cap drops drastically, all manner of cap circumvention are eliminated and there no buyouts. Montreal has no way to reduce cap and subsequently cannot ice a team for 2013. Bet that would go over marvelously.

Regardless, I was referring to cap spending teams who would have sell off players for nothing. Vancouver couldn't get any value for Luongo, Philly couldn't replace Timonen, Calgary couldn't resign Iginla. The list goes on of how problematic a loss of $10M in the cap is for many teams. Ironically, Montreal is not among that list. Sort of ruins your point.

Your scenario is extreme, but let's assume that the cap drops and there are no buyouts. A team in Montreal's position would have to trade higher priced players to teams willing to take them for less expensive players and likely have to pay a premium in draft picks or prospects to make it happen.

No not really. Say the Leafs went to the finals. If NJ can pull in 32m in playoff revenues, say the Leafs can bring in 60m (also makes the math easy).

60/2 (50%) is 30m. Basically them going to the finals would increase the cap by ~1m. Yes it's significant/noticeable that 1 team could do that, but not earth shattering by any means.

At a minimum you need to subtract the amount of another team making the finals. Using your NJ example that would mean a Leafs run to the cup finals would generate an extra $28m or less than $500k per team on the cap.

It's all about risk. If HRR grows relatively well, then the NHL won't really lose as much on the basis of current share/HRR levels.

If they don't grow and we're only merely back to the current HRR, then your number crunching is close to the mark.

To be fair and accurate, the relative share needs to be calculated at various growth levels and then compared to the baseline.

For sure, growth level determines whether we're talking about 50.5% of HRR or 52.5% of HRR whenever we're talking about the impact of delinking part of it. I don;t have the energy to crunch a whole ton of numbers. I put out an estimate with all the caveats of my assumptions, people can take it for what it is.

Your scenario is extreme, but let's assume that the cap drops and there are no buyouts. A team in Montreal's position would have to trade higher priced players to teams willing to take them for less expensive players and likely have to pay a premium in draft picks or prospects to make it happen.

Exactly. Even in a less extreme example, I do not agree with a system that effectively punishes fans more than teams simply because a good number would essentially be throwing away their players just to scramble under the cap. Edmonton, for instace, has waited long enough to be relevant, yet would barely make a $60M cap after Eberle and Hall's contracts kick in, even with two buyouts.

For sure, growth level determines whether we're talking about 50.5% of HRR or 52.5% of HRR whenever we're talking about the impact of delinking part of it. I don;t have the energy to crunch a whole ton of numbers. I put out an estimate with all the caveats of my assumptions, people can take it for what it is.

I know. Just pointing out that one can make it look as dire or as favorable as one chooses. If one were to attempt to do this academically, you'd need a base, best and worst case scenario at a minimum.